Tag Archives: economy

Turkmen Pres. Berdymukhamedov cuts subsidies to save money

JUNE 6 2017 (The Bulletin) — Turkmenistan’s President Kurbanguly Berdymukhamedov ordered his government to scrap all subsidies on household utilities, immediately drawing accusations that he was losing control of the economy.

In a surprise statement, the presidential press service said that Mr Berdymukhamedov had ordered parliament to cut the Soviet-era subsidies because they were “ineffective”.

Quoting official news sources, news agencies said that Mr Berdymukhamedov had ordered his government to cancel all subsidies except “for the most needy”.

Turkmenistan’s economy has been strained for the past three years, ever since energy prices started to collapse, and commentators said that a lack of funds and not any root and branch change of economic strategy was behind the move.

Turkmenistan holds the world’s fourth largest gas reserves. The vast majority of its foreign earnings come from selling this gas, mainly to China. The drop in gas prices has hit this income stream hard and although Mr Berdymukhamedov has never admitted as such, it has dented the economy. In 2015, the Turkmen currency was devalued by a third.

At the start of this year, Turkmenistan accused Iran of not settling a debt that it said it was still and in the last few months Mr Berdymukhamedov has embarked on a series cabinet reshuffles and sackings that analysts said hinted at panic and frustration over the economic turmoil.

Under Mr Berdymukhamedov, state subsidies in Turkmenistan have gradually been eroded. The subsidies have their roots in the Soviet Union which made a point of giving electricity, heating and water virtually away for free.

Turkmenistan is trying to extend its energy customer base to India and Pakistan via the so-called TAPI pipeline, and also to negotiate a way to sell gas to Europe via the South Caucasus energy corridor.

ENDS

(News report from Issue No. 332, published on June 12 2017)

Kazakhstan cuts key interest rate

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JUNE 6 2017 (The Bulletin) — Kazakhstan cut its key interest rate to 10.5% from 11% because it said that its currency had recovered. The Kazakh Central Bank has steadily cut its interest rate from a high of 17% at the start of 2016. It has said that the Kazakh economy is recovering. This year, the tenge has increased in value by 5% against the US dollar.

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(News report from Issue No. 332, published on June 12 2017)

Currencies: Kyrgyzstan’s som

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JUNE 12 2017 (The Bulletin) — The Kyrgyz som dropped another 0.3% over the week, adding to a general downward trend since the end of April when it briefly threatened to break through the lower 67/$1 barrier.

On April 27, the Kyrgyz som hit 67.13/$1, a level not seen since the currency devaluation of 2015/16. Since then the som has fallen back to a level that analysts have said is a more natural range of between 68 and 69 per $1. It is now trading at 1.25% higher than at the start of the year.

Elsewhere, the Uzbek soum continued its slow downward trajectory and the Kazakh tenge moved closer to falling through the 316/$1 barrier, a level not seen since the beginning of May. It has generally tracked down with oil.

Quitting EITI has not hurt, says Azerbaijan’s minister

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JUNE 8 2017 (The Bulletin) — Quitting the Extractive Industries Transparency Initiative (EITI) has not dented Azerbaijan’s ability to attract international investments, Azerbaijan’s deputy economy minister, Sahil Babayev, said during a conference. Azerbaijan quit the EITI earlier this year after a row over media freedom and human rights. Analysts had said that quitting the transparency group would hit Azerbaijan’s ability to pull in major loans. The EBRD and other lenders, though, have signalled that they are still prepared to lend to Azerbaijan on certain projects.

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(News report from Issue No. 332, published on June 12 2017)

Armenian exports rise

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JUNE 6 2017 (The Bulletin) — Exports from Armenia have increased by 16.1% in the first four month of the year compared to the same period in 2016, media reported quoting the national statistics service. Russia was still the biggest trade partner and China the second biggest. Like the rest of the region, Armenia has been shrugging off an economic malaise triggered by a fall in oil prices and a recession in Russia that has lingered from 2014.

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(News report from Issue No. 332, published on June 12 2017)

Armenia’s CB raises inflation target

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MAY 31 2017 (The Bulletin) — Armenia’s Central Bank raised its inflation target for 2017 to 2.5% from 0.6%, a leading indicator that it feels the worst of an economic downturn has passed. Armenia has been struggling to deal with deflation over the past couple of years. Recent data showed the economy starting to grow. The government targets 3.2% growth.

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(News report from Issue No. 331, published on June 5 2017)

Georgian economy grows

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MAY 30 2017 (The Bulletin) — A rise in remittances and exports has boosted Georgia’s economic growth, official data showed. It showed that Georgia’s GDP was 4.2% bigger in the first four months of this year compared to the same period in 2016. In the first four months of 2016, GDP grew by 2.8%. Remittance inflows and exports have increased.

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(News report from Issue No. 331, published on June 5 2017)

More Azerbaijani banks rely on state support to survive

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MAY 30 2017 (The Bulletin) — Five more Azerbaijani banks are currently failing to meet their capitalisation requirements, Rufat Aslani, head of the Financial Markets Supervisory Authority told media, suggesting more weakness in the sector.

In May, Azerbaijan’s biggest bank, the International Bank of Azerbaijan, which is 80% owned by the government and has a market share of around 60%, said that it needed to restructure its debt to stave off bankruptcy.

Now, after a series of small banks merged or went bankrupt in 2016, it has emerged that five mid-sized banks are still under the special supervision of Azerbaijan’s Financial Market Supervisory Authority.

“Today, under our supervision, there are five banks, capitalisation programs of which should be completed by mid-2017,” media quoted Mr Aslani as saying at a banking conference in Baku.

Mr Aslani did not name the banks but the Business New Europe magazine named three of them as Unibank, AtaBank and DemirBank — all mid-sized banks. None of the banks responded to requests for comment. The EBRD owns a 25% stake in DemirBank and Dutch development finance company FMO owns a 10% stake.

The Central Bank has imposed increased capitalisation rules to strengthen the sector. A recession in Russia and a collapse in oil prices since 2014 have halved the value of the Azerbaijani manat and heavily dented the banking sector.

Analysts had warned that Azerbaijani banks have been too relaxed about lending.

The currency devaluation and poor economic conditions have triggered a surge in bad debt which Moody’s, the rating agency, said stood at 30% of the banking sector’s loan portfolio.

ENDS

(News report from Issue No. 331, published on June 5 2017)

IMF says Tajikistan needs reforms before lending begins

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DUSHANBE, MAY 30 2017 (The Bulletin) — The IMF completed a mission to Tajikistan saying there had been progress over essential economic reform but more was needed before it could officially agree to a formal lending programme.

Tajikistan’s economy, and especially its banking sector, has been under increased pressure this year and it has asked for international help. The IMF has said that it will lend to Tajikistan but only if it implement various reforms first.

“The authorities indicated they wish to resume discussions on a possible IMF-supported program,” the IMF said in a statement.

“Concrete steps in key reform areas will need to be taken, building on the efforts already made by the Tajikistan authorities, to resume program negotiations.”

The IMF also said that Tajikistan needs to reform its creaking banking sector and create more jobs for its youthful population.

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(News report from Issue No. 331, published on June 5 2017)

Cerrencies: Kazakhstan’s tenge, Kyrgyzstan’s som

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JUNE 5 2017 (The Bulletin) — In a week of little movement, it fell to the Kazakh tenge to, quite literally, fall – but only slightly. It fell 1.1% to trade at a shade above 314/$1, its lowest since mid-May.

The move was, probably, triggered by a downward shift in Brent oil prices. The price of Brent dropped to just above $50/barrel. This is still within the generally accepted trade corridor and the impact on oil-sensitive currencies around the world was limit. The surprise was that the Azerbaijani manat, already smashed by the near- collapse of its biggest bank, didn’t shift downwards.

Elsewhere, the Uzbek soum continued its slow and controlled depreciation, down 0.6%, and the Kyrgyz som fell 1.1% to 68.1/$1 – its lowest since the end of April.

ENDS

(News report from Issue No. 331, published on June 5 2017)